Nexus between Macroeconomic Factors and Corporate Investment: Empirical Evidence from GCC Markets
The current study aims to explore the role of various macroeconomic factors in determining corporate investment. Using firm-level data of six Gulf Cooperation Council (GCC) region countries for a 14 year period (2007–2020), the current study establishes the empirical analysis by employing the system...
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| Format: | Article |
| Language: | English |
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MDPI AG
2023-02-01
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| Series: | International Journal of Financial Studies |
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| Online Access: | https://www.mdpi.com/2227-7072/11/1/35 |
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| author | Umar Farooq Mosab I. Tabash Basem Hamouri Linda Nalini Daniel Samir K. Safi |
| author_facet | Umar Farooq Mosab I. Tabash Basem Hamouri Linda Nalini Daniel Samir K. Safi |
| author_sort | Umar Farooq |
| collection | DOAJ |
| description | The current study aims to explore the role of various macroeconomic factors in determining corporate investment. Using firm-level data of six Gulf Cooperation Council (GCC) region countries for a 14 year period (2007–2020), the current study establishes the empirical analysis by employing the system generalized method of moments (GMM) technique. The empirical results reveal the negative impact of foreign direct investment whilst the positive impact of economic growth, financial development, and inflation rate on corporate investment decisions. Due to high market competition, foreign direct investment can hamper the growth of domestic industrial sectors. However, economic growth, financial development, and inflation rate positively drive the investment by enhancing the demand for industrial products, cheap financing, and price appreciation effect on production enrichment respectively. Based on results, it is suggested that corporate managers should consider the economic sensitivity of investment. The novelty of study can be listed, as the current analysis presents the dynamic role of various economic factors in determining the corporate investment decisions specifically in GCC region countries. |
| first_indexed | 2024-04-09T21:13:23Z |
| format | Article |
| id | doaj.art-c5ad2d1b5b154399b9570da741725abc |
| institution | Directory Open Access Journal |
| issn | 2227-7072 |
| language | English |
| last_indexed | 2025-03-22T03:21:24Z |
| publishDate | 2023-02-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | International Journal of Financial Studies |
| spelling | doaj.art-c5ad2d1b5b154399b9570da741725abc2024-04-29T18:25:31ZengMDPI AGInternational Journal of Financial Studies2227-70722023-02-011113510.3390/ijfs11010035Nexus between Macroeconomic Factors and Corporate Investment: Empirical Evidence from GCC MarketsUmar Farooq0Mosab I. Tabash1Basem Hamouri2Linda Nalini Daniel3Samir K. Safi4School of Economics and Finance, Xi’an Jiaotong University, Xi’an 710049, ChinaCollege of Business, Al Ain University, Al Ain P.O. Box 64141, United Arab EmiratesDepartment of Finance and Banking Sciences, Amman University College of Financial and Administrative Science, Al-Balqa Applied University, Al-Salt P.O. Box 19117, JordanFaculty of Business, Higher Colleges of Technology, Abu Dhabi P.O. Box 41012, United Arab EmiratesCollege of Business and Economics, United Arab Emirates University, Al Ain P.O. Box 15551, United Arab EmiratesThe current study aims to explore the role of various macroeconomic factors in determining corporate investment. Using firm-level data of six Gulf Cooperation Council (GCC) region countries for a 14 year period (2007–2020), the current study establishes the empirical analysis by employing the system generalized method of moments (GMM) technique. The empirical results reveal the negative impact of foreign direct investment whilst the positive impact of economic growth, financial development, and inflation rate on corporate investment decisions. Due to high market competition, foreign direct investment can hamper the growth of domestic industrial sectors. However, economic growth, financial development, and inflation rate positively drive the investment by enhancing the demand for industrial products, cheap financing, and price appreciation effect on production enrichment respectively. Based on results, it is suggested that corporate managers should consider the economic sensitivity of investment. The novelty of study can be listed, as the current analysis presents the dynamic role of various economic factors in determining the corporate investment decisions specifically in GCC region countries.https://www.mdpi.com/2227-7072/11/1/35corporate investmentfinancial developmentGCC countriesGMMmacroeconomic factors |
| spellingShingle | Umar Farooq Mosab I. Tabash Basem Hamouri Linda Nalini Daniel Samir K. Safi Nexus between Macroeconomic Factors and Corporate Investment: Empirical Evidence from GCC Markets International Journal of Financial Studies corporate investment financial development GCC countries GMM macroeconomic factors |
| title | Nexus between Macroeconomic Factors and Corporate Investment: Empirical Evidence from GCC Markets |
| title_full | Nexus between Macroeconomic Factors and Corporate Investment: Empirical Evidence from GCC Markets |
| title_fullStr | Nexus between Macroeconomic Factors and Corporate Investment: Empirical Evidence from GCC Markets |
| title_full_unstemmed | Nexus between Macroeconomic Factors and Corporate Investment: Empirical Evidence from GCC Markets |
| title_short | Nexus between Macroeconomic Factors and Corporate Investment: Empirical Evidence from GCC Markets |
| title_sort | nexus between macroeconomic factors and corporate investment empirical evidence from gcc markets |
| topic | corporate investment financial development GCC countries GMM macroeconomic factors |
| url | https://www.mdpi.com/2227-7072/11/1/35 |
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